Red zone claim 'entirely misguided'
A Christchurch red-zoned couple's claim for a $1.3 million payout from their insurer was ''entirely misguided'', according to a High Court decision released today.
Brookland's couple Paul and Georgina Rout took Southern Response to court for more than $1m in compensation for a home they would never live in after it was damaged in the September 2010 earthquake.
The home was red-zoned in November 2011.
After inspections, it was agreed by the insurer and the Earthquake Commission that the house should be demolished and rebuilt. Initially, the insurer said this would cost $485,505.
The Routs sought an independent assessor's advice which put the amount at $548,000. This was later revised to $760,000.
After more consultation their lawyer Grant Shand claimed, in court, that a rebuild would cost $1.29m - the cost of foundations that would be required to build on the same land.
It was a ''hypothetical build'' because the Routs had already sold the land to the crown for $396,000.
However, in his decision Justice David Gendall said a rebuild, under the policy, was for a home on ''good'' land. Shand had also not advanced any evidence to suggest that a rebuild would cost $1.29m, he said.
These ''notional'' rebuild costs were substantially higher than the actual rebuild costs that the Routs would incur for a similar rebuild on a sound non-red zone site, Gendall said.
He concluded that the insurer's obligation was to meet the cost of rebuilding or buying a replacement house for the Routs which was of a comparable size and condition to their existing house as when new, and offering the same amenities.
''If a new house is to be built, it is to be on a sound site elsewhere.''
He also said Paul Rout failed to inform Southern Response or the court that some months earlier he had received an estimate from Fowler Homes for rebuilding a comparable home for $619,000. However Rout continued, along with Shand to say a total rebuild figure was $1.29m.
''That may be seen as somewhat surprising, particularly as there was no quantum evidence of any kind before me from the Routs to justify these figure,'' Gendall said.
He dismissed the Routs claim for the larger figure saying the only evidence before him was the Rout's rebuild estimate.
''In my view this claim for relief is entirely misguided and is quickly dismissed.''
Gendall said the cost the Routs have put forward for rebuilding the house on a sound site was the Fowler Homes estimate with some contingency fees built in.
Gendall awarded the Routs $673,330.90 less the $113,850.00 they had already received from EQC.
Gendall dismissed their case for general damages of $50,000 for stress and invited submissions on the payment of costs.